Gold – Will Yellen help metal breach long-term falling trendline
Slide in gold in run up to Yellen’s Jackson Hole speech clearly tells us the markets have positioned for somewhat hawkish talk. The metal deflated to monthly 50-MA level of $1317 yesterday after having failed earlier this month to hold above the larger falling trend line hurdle noted on the monthly chart.
Whether we go over and above descending trend line level or deflate further below $1300 mark almost entirely depends on Yellen’s tone.
Markets to read Neutral/data dependent Yellen as dovish
Note that neutral/data dependent Yellen is as good as dovish Yellen for the markets, given that at the start of the year Fed was seen raising rates at least four times this year.
Yellen needs to be outright hawkish i.e. drop clear hint of a rate hike in December. Only then, gold prices could suffer losses below sub-$1300 levels.
Anything short of that and we are likely to see dip demand come back. Still, bullish bets are seen rising once prices breach falling trend line level on monthly closing basis. Such a move appears likely if Yellen comes out dovish today.
Whether we go over and above descending trend line level or deflate further below $1300 mark almost entirely depends on Yellen’s tone.
Markets to read Neutral/data dependent Yellen as dovish
Note that neutral/data dependent Yellen is as good as dovish Yellen for the markets, given that at the start of the year Fed was seen raising rates at least four times this year.
Yellen needs to be outright hawkish i.e. drop clear hint of a rate hike in December. Only then, gold prices could suffer losses below sub-$1300 levels.
Anything short of that and we are likely to see dip demand come back. Still, bullish bets are seen rising once prices breach falling trend line level on monthly closing basis. Such a move appears likely if Yellen comes out dovish today.
